Remington Lodging, which manages three other hotels in Key West, will take over property management at closing.
DALLAS – Ashford Hospitality Trust, Inc. announced that it has signed a definitive agreement to acquire the 142-room Pier House Resort and Caribbean Spa in Key West, Florida, for total consideration of $90 million in cash ($634,000 per key). Ashford intends to fund the entire purchase price with cash on hand. The acquisition is expected to close within the next 15 days.
The purchase price of $90 million represents a trailing 12-month cap rate of 6.2% on net operating income and an EBITDA yield of 7.0%. On a forward 12-month basis, the purchase price represents a cap rate of 7.6% on net operating income and an EBITDA yield of 8.5%, which equates to an 11.8x forward EBITDA multiple. In 2012, the hotel achieved RevPAR of $275, with occupancy of 83% and an Average Daily Rate of $333.
At the closing of the acquisition, Ashford intends to replace the property manager with Remington Lodging. Remington currently manages three hotels in Key West. These include the Southernmost House, Inn at Key West and the Crowne Plaza La Concha Hotel which is also owned by Ashford Hospitality Trust.
“We are very pleased to announce this acquisition of a very high quality hotel in a great market like Key West,” said Monty J. Bennett, Ashford’s Chairman and Chief Executive Officer. “Aside from being the nation’s 2nd highest RevPAR market, Key West has not seen any new competitive supply in the last 17 years given that the Rate of Growth Ordinance “ROGO,” presently sets extremely high barriers to any new hotel development in Monroe County. In particular, the Pier House Resort offered us a very unique opportunity, given its recent renovation, its prime location in Key West, and the significant operational synergies with Remington’s existing presence in that market.”
The Pier House Resort and Caribbean Spa was built in 1968. It has 142 rooms including 119 guest rooms and 23 suites. The hotel has 40 waterfront facing rooms and suites, and standard guestrooms average 325 square feet, while the 23 suites average 710 square feet. Additionally, the hotel offers 2,600 square feet of meeting space, a 10,000 square foot spa with 10 treatment rooms, three food and beverage outlets including al fresco dining at HarborView Cafe and the renowned Chartroom bar, a full-service fitness facility and private dock for charter pick-ups. The hotel is located at the northern end of Duval Street in the heart of Key West on a 6-acre compound with a private beach and immediate access to the Gulf of Mexico. Ashford expects to incur minimal expenses related to capital improvements given a $12 million dollar renovation recently completed at the property.
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